Remedying Defects in Compliance with the Companies Winding Up Rules

The Grand Court of the Cayman Islands recently delivered a judgment in In the matter of Pinnacle Global Partners Fund I LTD (FSD 231 of 2018 (RPJ), unreported 4 February 2019) where it adopted a pragmatic approach in exercising its discretion to allow the remediation of certain technical defects as to (non) compliance with the Companies Winding Up Rules, 2018 (the "CWR").

The case concerned a creditor’s winding up petition presented in respect of Pinnacle Global Partners Fund I LTD (the "Company"); Counsel for the Company argued that, as a preliminary issue, the petition was defective because no hearing date had been fixed and endorsed on it when it was filed and served as required by CWR, Order 3, rule 5 (and that such defects rendered the petition a nullity and that the Judge had no discretion to remedy such defects).

In his judgment, Justice Parker held that non-compliance of this nature with the CWR does not nullify the proceedings and therefore the Court does have the power to remedy procedural defects, but emphasized the importance of preventing injustice and prejudice from occurring when the Court exercises its discretion in this regard.

Whilst the case of HSH Cayman [2010 (1) CILR 114] was cited in confirming, amongst other points, that the Court is entitled to invoke its inherent jurisdiction to control its own processes in accordance with the CWR, amendments have since been made to the CWR that expressly provide the Court with the power to remediate technical defects as to (non) compliance with the CWR (without reliance on its inherent jurisdiction to do so).

In terms of the substantive hearing of the winding up petition, Justice Parker determined that no real evidence had been adduced which showed that the debt was disputed on bona fide grounds and made the winding up order accordingly.